JDA, Centerplate facilities hit snags; U.S. Silica hopes to wrap at initial talk; Revlon up on numbers

By Sara Rosenberg

New York, Nov. 5 - JDA Software Group Inc.'s credit facility has been somewhat stagnant in terms of syndication despite the changes that were made late last month, and as a result of problems with the financing, the acquisition it was going to help finance might now undergo some changes.

Also, Centerplate Inc.'s proposed buyout financing credit facility has come face to face with a major obstacle as the lead bank on the deal decided it would not fund the debt as committed but is willing to discuss alternative financing.

In other primary happenings, U.S. Silica Co. is still working with accounts at the original price talk level on its term loan A, and the current expectation is that the book will fill out there.

Over in the secondary market, Revlon Inc.'s term loan was better following the release of earnings results, and LCDX 10 headed lower with stocks.

JDA financing creating issues

JDA Software's $450 million five-year senior secured credit facility has not yet been successfully syndicated, causing the company to reevaluate its acquisition agreement with i2 Technologies Inc., according to a market source.

"No surprise given the market. Nothing pulled. Nothing changed. Still in flux," the source said regarding the credit facility.

Currently, following revisions in late October, the credit facility is comprised of a $250 million first-out term loan talked at Libor plus 600 basis points, a $175 million first-loss term loan talked at Libor plus 950 bps and a $25 million revolver.

All tranches have a 3.25% Libor floor, the two terms loans are both being offered at an original issue discount of 95, the first-out loan has 101 call protection, and the first-loss term loan is non-callable for one year, then at 103, 102, 101.

By comparison, the facility was originally launched to investors as a $25 million revolver talked at Libor plus 575 bps with a 3.25% Libor floor, and a $425 million term loan talked at Libor plus 575 bps with a 3.25% Libor floor, an original issue discount of 97 and 101 call protection against voluntary prepayments for one year.

Credit Suisse and Wachovia are the joint lead arrangers and joint bookrunners on the deal, with Credit Suisse the agent and Wachovia the syndication agent. Wells Fargo Foothill is part of the syndicate as well.

JDA looking to lower purchase price

On Wednesday, JDA said that it requested that i2 adjourn its shareholder meeting scheduled for Nov. 6 to allow the two companies to negotiate a reduced purchase price from the original roughly $346 million cash price.

JDA's reasoning behind the request was that as a result of the adverse effect of the continuing credit crisis, available credit terms would result in unacceptable risks and costs to the combined company.

Under the original purchase agreement, i2's common stock was going to be converted into the right to receive $14.86 per share in cash, and each issued and outstanding share of i2's series B convertible preferred stock was going to be converted into the right to receive roughly $1,095 per share in cash plus all accrued and unpaid dividends.

JDA to take more time if i2 meeting not postponed

In the event that i2 proceeds with its shareholder meeting on Nov. 6 as planned, JDA said that it will exercise its discretionary right under the acquisition agreement to take up to 60 days in order to continue to attempt to arrange acceptable debt financing.

"We continue to believe in the strategic benefits that a merger with i2 would provide. We are disappointed that the current financial credit market and economic environment is impacting our plans to close this acquisition this week. Our business remains strong as does our respect for i2's solutions, associates and customers, and we look forward to working with i2 and its board to finalize this acquisition," said Hamish Brewer, chief executive officer of JDA, in a news release.

The transaction was previously expected to close in the fourth quarter, subject to completion of financing, i2 stockholder approval, the amendment of i2's convertible note indenture, expiration or termination of the applicable Hart-Scott-Rodino waiting periods and regulatory and other customary conditions. Successful syndication of the debt was not a condition of the financing.

In September, the companies announced that they received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

JDA is a Scottsdale, Ariz.-based provider of supply and demand chain requirement software products. i2 Technologies is a Dallas-based provider of supply chain management products.

Centerplate buyout financing in trouble

Centerplate disclosed on Wednesday that National City Bank, the lead on its proposed $175 million senior credit facility, is not going to fund the debt because the bank claims that events occurred in the financial, banking and capital markets that could reasonably be expected to have an adverse impact on the successful syndication of the deal.

According to an 8-K filed with the Securities and Exchange Commission on Wednesday, National City also said that even though it was not going to fund the commitment or perform the services described in the commitment letter, it is willing "to continue discussing alternative financing arrangements."

The senior credit facility in question was expected to consist of a $90 million term loan, a $60 million revolver and a $25 million letter-of-credit facility.

The commitment was supposed to expire on Feb. 28, 2009 and was subject to there not being any changes that could hurt syndication.

Kohlberg still committed to buyout

Proceeds from the Centerplate credit facility, along with $125 million in equity, were going to be used to help fund the purchase of the company by Kohlberg & Co. LLC.

Centerplate said in the 8-K filing Wednesday that Kohlberg is still committed to closing the buyout in the first quarter of 2009 and is working to ensure that financing is in place at closing.

The acquisition agreement does not contain a condition that financing shall have been obtained. However, if Kohlberg refuses to close the transaction, the company is not entitled to seek court action, but will receive a reverse termination fee.

The buyout of Centerplate will be done through a debt tender for up to 70% of its notes and a merger in which 100% of its common stock will be acquired.

Each unitholder who tenders the notes underlying their units will receive $3.99 for each note tendered, subject to proration if more than 70% of the notes are tendered.

At the closing of the acquisition, each unitholder will also receive $0.01 per share for the common stock underlying the units for a total payment to income deposit securities holders of $4.00 per unit.

Centerplate is a Stamford, Conn., provider of food and related services including concessions, catering and merchandise services.

U.S. Silica expected at original pricing

U.S. Silica's recently downsized $102 million seven-year term loan A is currently anticipated to get done at initial price talk of Libor plus 550 bps with a 3.25% Libor floor and an original issue discount of 97, according to a market source.

"Don't currently expect any changes on pricing. Optimistic [it] can fill out there," the source remarked.

Proceeds will be used to help fund the buyout of the company by Golden Gate Capital and Preferred Unlimited.

On Tuesday, the loan size was reduced from $145 million, with the $43 million in lost funds made up through a variety of ways - the equity financing for the deal was increased by roughly $12 million, the mezzanine financing for the deal was increased to $80 million from $74 million, the purchase price for the company was reduced and some customer contracts are helping to make up the difference as well, the source explained.

Senior leverage around two times

With the downsizing to U.S. Silica's term loan A, plus the other changes to the buyout financing, the company's senior leverage will now be 2.1 times, as opposed to 3.0 times under the original structure, the source said.

In addition, leverage through the mezzanine debt will now be 3.75 times, as opposed to 4.5 times, the source continued.

BNP Paribas is the lead bank on the loan that was originally supposed to wrap up last week but the books were left open as investors and the banks were and are still waiting on ratings from Moody's Investors Service and Standard & Poor's.

"Hoping for ratings by the end of this week. Rating agencies got the update yesterday, so hopefully will finalize by the end of the week," the source continued.

A new commitment deadline for lenders has not yet been set, but the expectation is that once ratings come out, closing the books will come shortly thereafter, the source added.

Some more U.S. Silica loan details

Amortization on U.S. Silica's the term loan A is 2% in the first two years, 11% in year three, 12% in year four, 15% in years five and six, and the remainder in year seven.

Covenants include total leverage, minimum interest coverage and minimum fixed-charge coverage.

The term loan A is being shopped to a combination of banks and institutional investors. There was no pre-marketing stage for this term loan and, currently, the company does not have an existing lender base. U.S. Silica did get a credit facility about a year and a half ago, but that debt has already been taken out.

The company has an existing $35 million ABL revolver that is going to remain in place following completion of the new term loan.

U.S. Silica is a Berkeley Springs, W.Va.-based producer of ground and unground silica sand, kaolin clay, aplite and related industrial minerals.

Revlon trades up

Switching to trading happenings, Revlon's term loan gained some ground on Wednesday after the company came out with third quarter results, according to a trader.

The term loan was quoted at 79½ bid, 82½ offered, up from 77½ bid, 80½ offered, the trader said.

For the third quarter, Revlon reported net income of $29.2 million, or $0.57 per diluted share, compared to a net loss of $10.4 million, or $0.20 per diluted share, last year.

Net sales for the quarter were $334.4 million, compared to $330.8 million in the 2007 third quarter.

Operating income was $19.8 million, unchanged compared to the year-ago period.

And, adjusted EBITDA for the quarter was $42.6 million, compared to $42.8 million last year.

Revlon to pay down debt

Revlon also announced on Wednesday that it plans to repay its MacAndrews & Forbes senior subordinated term loan in full using proceeds from a $107 million equity rights offering that would allow stockholders to purchase additional shares of class A common stock.

The subordinated term loan was originally sized at $170 million, but $63 million of its was already paid down earlier this year with proceeds from the sale of the company's non-core Brazilian brands.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products company.

LCDX dips

Also in the secondary, LCDX 10 was softer in sympathy with equities, while the cash market was, on average, unchanged to down by about a quarter, according to a trader.

The index was quoted around 87.60 bid, 87.85 offered, down from 88.80 bid, 89.30 offered, the trader said.

Nasdaq closed down 98.48 points, or 5.53%, Dow Jones Industrial Average closed down 486.01 points, or 5.05%, S&P 500 closed down 52.98 points, or 5.27%, and NYSE closed down 332.92 points, or 5.25%.

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